Builders Risk Insurance

Builders Risk Insurance......Should you have it for your Home Construction Projects??

Did you know that from a 2020 Survey that 38% of Gen-Xers were either in the midst of or planning a renovation project. That means there are plenty of homes that are either vacant or in mid-construction right now.

Theres no doubt, most of these customers have already factored home insurance into their calculations. But most aren't aware that if the worst happens, like a fire, flood or theft, your insurance agents don't normally tell you that your homeowners’ insurance often won’t cover it.

Having builder’s risk insurance is the best way to protect yourself from potentially huge costs if something goes wrong. But what does builders’ risk insurance cover? And do you really need to get it for simple home renovations?

So, what should you really know about builders’ risk insurance coverage and what it does. How it can help you and your family from some possible unaware of insurance issues.

What Is Builder’s Risk Insurance?

If you get builder’s risk insurance in time, it will protect your home throughout the project. From the moment the first hammer is struck to the time the contractor hands over the keys to your new home, you won’t be exposed if you get burgled or your home floods.

If you don’t have the right level of coverage, you could find yourself seriously out of pocket. Just imagine if you had to cover the cost of fire or flood damages out of your own pocket while deep in a construction or renovation project!

And no this is not Contractors’ Insurance

And yes, I'm sure many are reading and could be thinking, could read this and say, isn’t this something that the builder should arrange? You could be thinking this, but it’s not always the case.

Builders should take out contractors’ insurance and it’s important to check that this is in place before they start work. This is a form of general liability insurance that protects the contractor and their property. But if something goes wrong in your property during the build, you’re unlikely to be covered.

That’s why when you hire a contractor for new home construction, they may require you to provide builder’s risk insurance as part of the contract.

Not Just for New Construction

Do you need builder’s risk insurance for renovations too? You usually do. Again, if you’re completing major renovations, your contractor may make it a condition of the contract.

Anyone who is planning to fix and flip a home should also invest in builder’s risk insurance. The house will be vacant while the home renovations are being carried out, making it a target in the local area.

When you call your insurer, talk to them in detail about the project. They may not be able to provide you with a yes or no answer right away. Ask the question in plenty of time so you can make arrangements for builder’s risk insurance if they can’t cover you.

What Does Builder’s Risk Insurance Cover?

Builder’s risk insurance covers the entire building. So if you’re adding a back addition to your house, it will cover that. But it will also cover the roof if something goes wrong during the period the home is under renovation.

Unfortunately, building sites can attract thieves. Builder’s risk insurance covers the construction supplies that are left on-site during the new home construction or renovation. It also provides coverage if an act of vandalism or arson takes place.

Additional coverage may include:

• Temporary buildings and structures such as scaffolding
• Temporary infrastructure
• Landscaping
• Equipment breakdown

Wrap up liability cover – protects contractors and subcontractors

Not all builder’s risk insurance policies provide the same level of coverage and some may offer add-ons. Talk to the provider or your broker about the scope of your project before deciding the level of coverage you need. Your contractor will also be able to advise.

Do We Need to Stay On-Site?

Many families prefer to move out while renovations are taking place. This is often when people leave themselves even more exposed with their existing policies. Most regular home insurance policies do not provide vacant home insurance.

However, builder’s risk insurance includes vacant building insurance. You can choose either to remain on-site or temporarily move out during the construction period. This will also provide coverage for new homes that haven’t been lived in yet.

What Information Will a Broker Need?

The more information you can provide about your renovation project, the more tailored a quotation they should be able to obtain. Collect the following information before making the call:

• Information about your property square footage
• Age
• Type of house
• Projected value after renovation
  
• Previous insurance claims
• Details about the project
• Type of renovation or new construction
• Start date
• Estimated cost
  

Ask your Insurance Agent if this is something that you feel would benefit you and your loved ones.

Written by:

Owner Matt Brunner

 Answer Construction LLC